We’re still reeling from Apple’s stunning and historic earnings release after the market close. The company beat expectations by over 34 percent, posting $7.79 per share and up an unbelievable 121.9 percent y/y and 21.7 percent q/q. Revenues grew 81.5 percent y/y and 15.5 percent q/q. The company now sits on over $76 BN of cash and long-term securities, which equates to around $83 per share. We read somewhere that Apple could almost purchase RIMM with just the increase in its cash position this quarter.

We found it interesting listening to traders after the release. Many were itching to sell the pop in after hours, which saw the stock trade over $400. Normally after such a nice short-term run into the release we would agree. But when the company blows away earnings in such a stunning manner we look to history to get a sense of how the stock trades post earnings.

The most similar post crash quarterly result we could find was the Q2 2010 release, where the company beat estimates by almost 36 percent. The table below shows the earnings and revenue growth for that quarter were not even in the same zip code as today’s announcement, however.

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Furthermore, in the following charts we compare how the stock traded prior to the two relevant quarterly results. Apple has been consolidating for almost the entire year and was only a couple percent above its February $365 intraday high going into today’s earnings announcement.

What’s next? We’re not certain, but if past is prologue, the stock could trade up to almost $420 in the next few days before consolidating its gains and preparing for the next leg up into, what many expect, the September release of the iPhone 5.

Can’t you just hear the prayers of those hoping for a pullback so they can get long and longer? Other than the health of Steve Jobs, the only thing holding the stock back, in our opinion, is that numbers are so good they just can’t be believed. If Apple earns $8.38 this quarter, the stock, at $395, trades for a multiple of 13.6. That is hard to believe given the company’s growth rate. Stay tuned.

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

Apple has to continue to invent new hardware OR provide dramatic upgrades to existing hardware. They have been successful over the years in doing both but as with any technology are moving toward incremental improvements. The big question here is whether consumers will pay for such improvements. iPods are becoming a thing of the past as shown in the sales (smart phones can do everything the iPod does) and competition with Android phones is hurting iPhone sales. Will the cloud platform be the big income driver going forward? Hard to tell and there is already lots of competition though Apple designs proprietary features into their hardware that makes it difficult for Appelians to use third party cloud services. Personally, I think they are approaching a plateau but there may be another 10-15% growth in stock price left.

When Apple consistently and strongly guides the analysts downward to super conservative earnings estimates, why is it any surprise when Apple beats the earnings estimates by so much? Also, if the analysts are so consistently wrong with their earnings estimates, why does anyone even listen to them?

Having said that, even without the blow-out in the comparison to the estimates, Apple had a great quarter, save for the iPad and iPod eating into Mac sales. Methinks this horse has a ways to run.

Apple on conservative estimates, we all know the consumer is fickle.
You can’t predict purchases on the consumer side.
Businesses, like Oracle, pretty much have a lock in, their income may be more predictable.

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About Barry Ritholtz

Ritholtz has been observing capital markets with a critical eye for 20 years. With a background in math & sciences and a law school degree, he is not your typical Wall St. persona. He left Law for Finance, working as a trader, researcher and strategist before graduating to asset managementRead More...

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